Deals | Thu Mar 26, 2015 8:31pm GMT

CANADA STOCKS-TSX falls on broad declines despite oil price surge

(Adds portfolio manager comments, updates prices to close)

* TSX ends down 59.57 points, or 0.40 percent, at 14,869.80

* Eight of 10 main sectors finish lower

By Alastair Sharp

TORONTO, March 26 (Reuters) - Canada's main stock index slipped on Thursday as pessimism about economic growth hit banks and insurers, offsetting limited resource stock gains on the back of Middle Eastern violence that pushed oil prices higher.

Saudi Arabia and its allies launched air strikes on rebels in Yemen that spooked investors, boosting commodity markets but dampening enthusiasm for equities globally.

While oil prices jumped more than 4 percent, Canadian producers saw much more modest advances or even slipped on the day.

"Investors are getting used to the fact that oil is volatile, it swings back and forth quite a bit on a day-to-day basis," said Marcus Xu, a portfolio manager at M.Y. Capital Management Corp in Vancouver.

After an early rise, the Toronto Stock Exchange's S&P/TSX composite index ended the day down 59.57 points, or 0.40 percent, at 14,869.80.

Xu said he has become more bearish recently on the short-term prospects for the Canadian market, which he said could slip towards 14,000 by mid-year before recovering somewhat.

With recent U.S. economic data introducing doubts about the Federal Reserve's interest rate trajectory, investors are trimming bullish holdings in Canadian banks, said Michael Sprung, president at Sprung Investment Management Inc.

Toronto-Dominion Bank slipped 0.5 percent to C$53.64, while Royal Bank of Canada gave up 0.3 percent to C$75.79. Insurer Manulife Financial Corp lost 1 percent to C$21.44, and Brookfield Asset Management was down 0.9 percent at C$66.49.

Pipeline company Enbridge Inc lost 1.8 percent to C$61.06, while fellow pipeline operator TransCanada Corp fell 1.4 percent to C$55.08.

The biggest Canadian beneficiaries of the oil spurt were some of its largest operators, which Sprung said are well placed to benefit from likely consolidation as historically low oil prices hurt smaller players.

Canadian Natural Resources gained 1.6 percent to C$39.08 and Suncor Energy Inc added 1.1 percent to C$36.55. (Reporting by Alastair Sharp Editing by W Simon and James Dalgleish)

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